Before we start talking about how to mine cryptocurrency, what are the ways to mine it, let's clarify what is actually mining cryptocurrencies. I believe not everyone really understands how it works, because in the traditional world mining, for example, gold is a real hardware way of mining. You don't really need a gold digger to do it with crypto. But what you really need is a computer hardware. So it must be a specific computer that can do the job, and its job is to mathematically solve the problem. Once you solve the problem, you get the rewards for that.

This whole concept is basically called mining. Cryptocurrency mining is targeted at two main aims. First, to create more often of a new cryptocurrency, for example, you mine to get more of bitcoin. And then it's also worth to mine, to verify transactions, to supplement the actual blockchain of the bitcoin or whatever other cryptocurrencies.

Ok, so then what kind of hardware you would need to actually start mining?

There are three main ways how you could as a consumer, as a potential investor, you could start mining. So, the first one, we'll speak about GPU mining. This is basically mining with video cards, the same as you would use for the PC hardware. And then the other way, probably most popular for large scale miners is the ASIC miners, which are targeted to solve only one specific problem. This is why they're called ASIC, it's actually an abbreviation, it means application-specific integrated circuit. Never mind, but that's hardware.

It is a small box which is really powerful and it mines bitcoin or it can actually mine other cryptocurrencies as well but it can normally mine at only one specific algorithm that it is built for. And we can also touch the third way of, sort of, mining for consumers in which you wouldn't have to buy any hardware and it's cloud mining. So basically a company has quite a lot of power and it can allow you to run this power for yourself. So you wouldn't need to buy any hardware or to host it, you simply can rent it.

So, if I'm a typical user of a PC, I do have my PC in front of me, I do have a GPU card in it, can I start mining? Is that how it goes?

Yeah, basically you can start mining was with your own PC or even laptop. It is possible.

And do I have to extend it in terms of putting more of the GPUs inside of it? How will it work?

Absolutely. The more GPUs you have, the more power you have, the more hashrate you can generate to do mining, the more rewards you will get.

Okay, okay. And those rewards, where will they go? How will I receive those rewards?

Right, let's look at a typical example. For example, you've got one single video card you would like to start mining and you would like to start mining directly with a, let's say, Ethereum blockchain. In that case, all the hashing power that you would send to the blockchain would be targeted at, for example, creating new coins and you would get the whole reward, but such as you're trying to solve a mathematical problem and your personal hashing power wouldn't be that significant compared to the whole market right now, that means that you probably won't get a lot.

For example, you would be mining for about three months, you wouldn't get anything and then at one point in three months or maybe in four or five, you would get the reward, which would be more significant than if it would be distributed if you would mine with a mining pool. But, so, for example, you're getting this reward, but it's not consistent and you really don't know if you will get this reward. As a small miner, as a consumer, let's say, you would be more interested in mining with a mining pool. So that means that you would join other miners and you would mine as a community. And that would mean that your total hashing power would be more significant and you would get the rewards more consistently. You would get rewards every single day, every single hour, etc.

But such as there is a whole community of the miners, and that means that you get only a proportion of this reward as a personal miner. You're still better off because, well, you're getting this more consistently, right? So this looks more like a business at this point, and you can plan your earnings, your expenses, obviously.

Well, yes. And future profitability, basically. If it's more consistent, you would be able to actually make sort of a cash flow out of it.

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Read more about whether you should start mining in 2020 in our blog.

Also, it seems it is a great time now to buy bitcoin, have you already bought one?